After a challenging year, growth stocks have been back on investors’ radar amid signs of cooling inflation and the Federal Reserve slowing its interest rate hikes. Despite strong buying, the following three growth stocks trade at a substantial discount from their 52-week highs, thus offering an excellent buying opportunity for long-term investors.
Nuvei
Nuvei (TSX:NVEI) is a global payments technology that facilitates business processing of next-gen payments. It operates in over 200 markets, supporting 150 currencies and 586 alternative payment methods (APMs). With the growth in e-commerce, more people are adopting digital payments, thus expanding the addressable market for Nuvei. Meanwhile, the company is strengthening its architecture and infrastructure, investing in developing innovative products, expanding its geographical reach, and adding new APMs to drive its market share.
Besides, Nuvei has signed an agreement to acquire Paya Holdings for US$1.3 billion. The acquisition could strengthen its position in the growing B2B (business-to-business) market. Further, the company has boosted its position in the United States online gaming industry through Maryland and Kansas gaming license wins. So, the payment solutions provider’s outlook looks healthy. However, despite its high growth prospects, the company trades at an over 55% discount from its 52-week high while its NTM (next 12 months) price-to-earnings stands at 17.1. Considering all these factors, I expect Nuvei to deliver oversized returns this year.
WELL Health Technologies
Second on my list would be WELL Health Technologies (TSX:WELL), which has gained over 47% since the beginning of this year. Despite the uptrend, it is still trading at a 26% discount compared to its 52-week high. Also, its NTM price-to-sales and NTM price-to-earnings multiples stand at 1.5 and 16.6, respectively, making it an attractive buy.
Meanwhile, WELL Health has continued to deliver solid financials, with its revenue and adjusted net income having grown by 47% and 51% in the November-ending quarter, respectively. Along with strategic acquisitions, strong performance from its virtual services segment drove its topline. Despite its acquisitions, the company has been maintaining its profitability, which is encouraging.
Meanwhile, I expect the uptrend to continue. The virtual healthcare market is growing amid the development of innovative products and increased internet penetration. With its acquisitions in the United States, the company is well-positioned to benefit from addressable market expansion.
goeasy
Earlier this month, goeasy (TSX:GSY) reported impressive fourth-quarter performance, with loan originations of $632 million, representing 25% year-over-year growth. These loan originations expanded the company’s loan portfolio to $2.8 billion, up 29% from its previous year’s quarter. The lender’s net charge-off rate declined by 60 basis points from the fourth quarter of 2022 to 9%, within its target guidance of 8.5%–10.5%. Supported by these operational improvements, adjusted EPS (earnings per share) grew 11% year over year.
Meanwhile, goeasy continues to expand its product offerings, strengthen its distribution channels, and improve penetration to drive growth. The company’s management hopes to grow its loan portfolio by 79% to $5 billion by the end of 2025. The loan portfolio expansion could grow its revenue at a CAGR (compounded annual growth rate) of 18.5% while delivering a return on equity of over 22% annually.
Despite its healthy growth prospects, the company trades 14% lower than its 52-week high. Its NTM price-to-earnings also stands at 9.3, making it attractive at these levels.
